Tesco JV sees 8% growth in Q1 of FY17

The revenue figures show that the JV rose in March 2016 to Rs. 849 croreSagar Malviya | ET Bureau | Updated: July 14, 2016, 09:13 IST

Tesco's supermarket business in India notched its first sales growth during year to March helped by store expansion and strong same store sales. Trent Hypermarket (THPL) —the equally owned joint venture between the Tata Group and UK’s Tesco, posted an 8% rise in sales during year to March 2016 to Rs 849 crore.

The British retailer recorded a marginal decline in sales in 2015, its first year with Tata as retail partner for Star Bazaar hypermarket. In FY16 the like-for-like sales growth of Star Bazaar stores was 9.2% as against 1.1% in the preceding year, revealed data from Trent’s latest annual report.

Loss before tax was lower at Rs 44.7 crore compared to Rs 65.3 crore a year ago. “The business model envisages a multi-format strategy focused in the states of Maharashtra and Karnataka with the aim of creating local scale and being closer to customers.

The focus would primarily be on food and grocery with a clear emphasis on fresh food as the lead footfall driver,” the report said. The company that runs three formats — Dailies, Market and Hyper — under the Star banner opened seven stores during the fiscal to take its total count to 24, its fastest yearly expansion ever.

For Tesco, the world’s third-largest retailer that runs nearly 6,800 stores globally, the Indian business is miniscule. But the opportunity offered by the $500-billion retail market is huge for any player, foreign or local. Food and grocery accounts for almost 50% of the overall retail basket in India, although general merchandise, personal and home products fill up a bulk of retailer’s profit pool.

However, Trent said its focus would be primarily on food and grocery. “We source most of our vegetables directly from farms hence fulfilling a strong customer promise around quality and price. Even during the current challenges to access fresh produce in select markets, we have ensured our customer’s need is not compromised in any way,” said Jamshed Daboo, managing director, Trent Hypermarket.

The UK based retail giant, which was a wholesale supply partner of Tata, bought 50% stake in Trent Hypermarket two years ago. “The applicable regulations require THPL to invest $50 million from the first tranche of Tesco’s infusion to be committed to green-field backend infrastructure investments,” the report said.